Trump Adm. Moves to Reduce Chances for Real Estate Meltdown
On January 20, the very day he became president, his administration suspended, indefinitely, a policy announced by the Obama Department of Housing and Urban Development (HUD) on January 9, that would have gone into effect yesterday, January 27. What the Obama administration attempted to do was to cut the mortgage insurance premium by one-quarter of one percent set by the Federal Home Administration (FHA), used by many potential home buyers.
FHA insurance is a federal government program which subsidizes real estate transactions, financed by home loans. The beneficiaries include not only some home buyers, but also banks and those in the real estate industry, such as real estate agents and home builders. It makes loans cheaper, and reduces the risks to lenders who choose to make loans to borrowers who are greater risks.
Bloomberg explained the way it works: “The FHA sells insurance to protect...